Our investment in Zeal

Payroll is the central nervous system of every company. Oftentimes, it’s even the first piece of software that a company adopts. Without it, an organization wouldn’t know who’s employed, how much an employee should be paid, and whether they’re compensated in an accurate and compliant manner.

As an employee, you expect payroll to “just work”. When payroll is incorrect, employees lose trust in their employers. When payroll isn’t run on time, it creates financial hardship for employees, especially the 63% of Americans who reported living paycheck to paycheck since the COVID-19 pandemic. When you consider how significant payday is for employees, you start to see that payroll is one of the most critical touchpoints between an employer and an employee.

As an employer, payroll can cause massive headaches, financial burden, and, at worst, legal ramifications when not processed properly. Mis-logged hours that need to be corrected after payroll is run can disrupt budget accuracy and cost time to correct. Miscalculations in overtime can lead to compliance and legal issues. Late or unpaid payroll taxes can result in costly penalties from the IRS. Data discrepancies can lead to inaccurate salaries being paid, requiring adjustments on the next pay run. Everyone expects payroll to “just work” but when it doesn’t, things quickly go terribly wrong.

I experienced this pain first hand as an early product manager at Zenefits. Payroll was the core of our HR suite, and yet keeping our customers’ payroll in sync with all of the systems they used to run HR was a constant challenge. When we tried to integrate directly with third-party payroll systems, like ADP and Intuit, the lack of open APIs forced us to fall back on transferring data via robotic process automation and manually via spreadsheets — all cumbersome and error-prone solutions. If there was an error in the payroll system, it resulted in a data auditing nightmare, one that could take tens of hours to resolve. In order to realize our vision of a connected, all-in-one HR suite, we naively set out to build our own payroll system. This was a massive undertaking (massive being an understatement here!) that not only required a steep learning curve — gross to net calculation, tax withholdings, money transfer licenses, and more — but also a substantial tech lift to build a payroll system that was flexible and customizable, as well as accurate, reliable, and compliant. Needless to say, building a payroll system is not for the faint of heart!

Embedding payroll into your product should be as easy as writing a few lines of code.

Enter Zeal. I’m thrilled to announce our Series A investment in Zeal, a fintech infrastructure platform for embedded payroll, and join their board. Zeal’s enterprise-grade APIs and modular white-label components allow any platform to embed a full-featured payroll system into their product. This gives companies unprecedented control over onboarding employers and running payroll — all while managing compliance with ease. By taking an API-first approach, Zeal provides fast, secure, and accurate data exchange, enabling integrated HR experiences where data automatically flows to and from payroll and other HR systems without any manual data input. In addition to their full payroll suite, Zeal’s most recent product, Abacus, a gross-to-net calculation API, allows developers to access compliant payroll calculations for all 50 states in the United States via a simple API.

When we first met the Zeal team, we were struck by founders Kirti Shenoy and Pranab Krishnan’s deep passion for payroll, as well as the depth of Zeal’s product. The founder duo balances uncanny speed with thoughtfulness and a healthy obsession for the customer problem at hand. Kirti and Pranab are joined by a stellar team (they’re hiring!) that have worked at leading companies like Gusto, Namely, Square, Stripe, and more.

At Spark Capital, we’ve long believed in fintech infrastructure enabling new product experiences, investing early in companies like Alpaca, Affirm, Plaid, Marqeta, Rapyd, and more. We believe Zeal’s APIs will power a new age of connected HR experiences, one that allows HR companies to integrate payroll at their core and for HR to become more “audience-driven” by embedding payroll into vertical SaaS. We’re especially excited about Zeal’s opportunity to reduce manual payroll processes for professions with project-based work and complex wage structures where traditional payroll platforms are fundamentally not architected to accurately model workers’ wages.

We couldn’t be more excited to partner with Kirti, Pranab, and the entire Zeal team, and an awesome group of co-investors, including Box Group, Commerce Ventures, Long Journey Ventures, and individuals like Vlad Tenev (CEO of Robinhood), Jason Gardner (CEO of Marqeta), Omri Dahan (CRO of Marqeta), Michael Vaughan (former COO of Venmo), Matt Straz (former CEO of Namely), Manik Gupta (former CPO of Uber), J Zac Stein (Chief Product Officer at Lattice), and more.